SMM5, March 15: since 2020, with the continuous spread of the global epidemic, Shanghai zinc once hit a new low since 2016, plummeting to 14265 yuan / ton, the profits of mining enterprises were seriously squeezed, most of the mines lost money when zinc prices were low, deliberately controlling the progress of resuming production and the willingness to ship, so the shortage of domestic zinc concentrates appeared, and the processing fees of domestic zinc concentrates were gradually reduced. From a high of $6250 / metal tonne at the beginning of the year, it dropped to $5100 / tonne. As of May 18, the processing fee for imported mines was US $160 per dry ton, a decrease of US $150 per dry ton compared with US $310 per dry ton at the beginning of the year.
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As far as China is concerned, in May, with the strong trend of zinc in Shanghai and the continuous reduction of zinc concentrate processing fees, the mine losses have been repaired, many mines have turned losses into profits, and the mines that originally only produced and did not sell began to ship one after another. the problem of tight supply at the end of the mine has been alleviated. However, at present, due to the large reduction in processing fees of zinc concentrate and the profit of extrusion smelter, as of May 18, the TC of domestic zinc concentrate is 5100 yuan / metal ton, and some smelters with relatively high cost have lost nearly 300yuan / ton, so some smelters should be overhauled ahead of time. Coupled with the zinc smelter raw material inventory is low, from the current SMM announced TC, is the smelter can accept the lowest price.
Overseas, it is reported that 11 mines in Peru will restart production; the first phase of the Peruvian mining industry will restore 80% of its production capacity. It is understood that the production of Nexa's Cerro Lindo and El Porvenir mines will resume on May 11, and the gradual recovery period is expected to continue until the end of June. Glencore's Antamina mine is expected to remain shut down for a short period of time because of a relatively serious infection, and is not expected to recover until it can ensure the health of the miners. Therefore, as far as zinc is concerned, Peru, as the second largest producer of zinc mines in the world, has a relatively limited actual recovery. Overall, overseas zinc mines are expected to be tight from June to July. SMM expects that changes in domestic zinc concentrate processing fees will be limited by the end of May, but in June, due to the impact of imported mines from Peru and other countries, it is expected that there will be room for reduction in zinc concentrate processing fees.
With the escalation of global trade disputes in 2019 and the downward pressure on the global economy, central banks began a wave of interest rate cuts. At the same time, the meeting of the political Bureau of the CPC Central Committee stressed that at present and for some time to come, the basic trend of China's economic stability and long-term improvement will remain unchanged, and 2020 will also be the year when China will build a moderately prosperous society in an all-round way and the 13th five-year Plan ends. In this context, the new crown virus is rampant all over the world, and it is worth looking forward to how to achieve steady economic growth.
In the zinc market, overseas mines will increase production step by step in 2019, but the increase in domestic mine production will be repeatedly hindered. In the first quarter of 2020, zinc prices fell through the mine cost line, mine profits plummeted, and how smelters and mine profits will be distributed in 2020. can overseas mines be expected to be put into production under the disturbance of the epidemic situation? In addition, the output of domestic refining zinc smelters broke through the bottleneck in 2019 and refreshed the all-time high. Under the disturbance of the supply end of zinc mines in 2020, can the capacity utilization rate of smelters maintain a high load? Whether the infrastructure investment under the tone of "stabilizing the economy" in 2020 can exceed the expected performance, whether the super-seasonal performance of the galvanizing industry can still be expected, and whether the contradiction between supply and demand of zinc may reverse in 2020, paying attention to and laying out structural opportunities is another option. Can zinc prices pick up in 2020?
In view of the above topics, SMM will invite industry bigwigs, industry professionals, upstream and downstream enterprises of the industry chain to hold the "2020 (15th) lead and Zinc Summit" in Changsha to discuss the current situation and problems faced by the industry, as well as future development prospects, and analyze the fundamentals and the future trend of zinc prices.
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